A life insurance policy could help you to provide your family with financial security when you die and can no longer look after them. In this article I will discuss the what, why, how, when and where of a life insurance policy. If you are wondering about getting life insurance, then you may want to read this.
What is a life insurance policy?
A Life insurance policy is a contract between an insurance company and the insured which promises to pay out a certain amount to your beneficiaries in the event of your death.
It also sets out the provisions of the life insurance coverage. These provisions include premiums, loan procedures, face amounts, and the designation of beneficiaries, among many other clauses.
Policies may be for term or permanent cash value types of coverage.
Why is a life insurance policy essential?
The benefit from a life insurance policy is not for you. It is to provide for your loved ones, but after you have gone.
After your death, the life insurance money is paid to those who rely on you to give them a secure standard of living, which they might lose if you should die. This is money when they need it the most, with no income tax or publicity.
How does a life insurance policy work?
Term life insurance is only for a certain period of time, and if the policyholder dies during the term of insurance he/she receives the death benefit. In the case of the insured person dying after the policy expires, however, no benefit is paid.
At the end of the term period, the policy expires with no accumulated cash value, and no benefits are payable. Term is the cheapest, but it’s unlikely the death benefit will be paid since the life insurance policy will probably lapse before you actually die.
When a person has family and becomes ill, not only does the sick person need support, but also the family often requires relief. Short-term income protection is an added coverage to life insurance and provides extra cash to cover the family’s needs when one spouse is ill.
You will need to decide on the amount of term life insurance before you start to shop around. Most companies have effective savings rates at $250,000, $500,000 and $1 million.
When can you take out a life insurance policy?
You may be able to get a lower premium for your insurance if you have lowered your cholesterol, lost weight or quit smoking.
A 35 year old nonsmoking male in excellent health can buy a $500,000 term life insurance policy for about $700 per year.
Keep in mind your age determines the length of time the term policy will have a guaranteed level premium. You may not be able to get more than a 10 year guarantee if you are over 50 years of age, so start while you are still young.
Where can you find a life insurance policy?
Finding a life insurance policy is something that you should not rush into.
If you are planning to apply directly for life insurance, then you may find it easier to apply online. All this information will enable you to make the right decision about the best company to get your most suitable life insurance policy from.
Getting online term life insurance quotes can be a very effective and convenient way to save you both time and money when shopping for term life insurance. The quotes are free and you’re never under any obligation to accept any quote that is offered to you.